LISBON, Portugal - Europe won some further modest respite from its raging debt crisis Wednesday as Germany and Portugal became the latest eurozone countries to borrow with relative ease.

Both countries saw their borrowing costs ease in the auctions, in a further sign that investors may have temporarily put some of their concerns over Europe's debt crisis to one side at the start of the new year. Italy and the Netherlands have also managed to sell their debt over the past week or so in a fairly trouble-free manner.

Germany, the biggest contributor in Europe's bailouts, managed to sell €4.06 billion ($5.3 billion) in its benchmark ten-year bonds at an average yield of 1.93 per cent. That was down on the previous 1.98 per cent it had to pay.

Meanwhile, Portugal, which was bailed out last April after being locked out of international markets, paid a markedly lower interest rate to borrow €1 billion ($1.3 billion) in three-month treasury bills. The rate fell to an eight-month low of 4.346 per cent and was sharply down from the 4.873 per cent rate it had to pay in a similar auction last month. Though Portugal cannot tap long-term bond markets at a reasonable price, it has sought to maintain a market presence by issuing shorter-term debt.

Analysts said the improvement may represent a sign that Portugal is regaining the markets' confidence as it carries out spending cuts and revenue increases in return for its €78 billion ($102 billion) bailout.

"There's been an improvement in the risk perception of Portuguese debt, which has driven rates down" said Filipe Silva, debt manager at Portuguese financial group Banco Carregosa. "Now we just need to see whether it holds."

Germany can borrow cheaply and for longer because its finances are among the strongest in the eurozone but concerns about the costs of bailing out other countries have raised questions about its finances too. The German auction was closely watched after a bond sale late last year failed to sell a third of the bonds on offer.

Though better than November's auction, which raised fears that Europe's debt crisis was spiraling out of control, there was some concern voiced over the amount of German bunds investors actually wanted.

Bids for €5.14 billion ($6.7 billion) worth of bonds exceeded the full amount on offer of€5 billion ($6.5 billion), but only barely, counting the €943 million the government kept back for secondary market operations.

"Yes, it was covered, so that's a relief," said Marc Ostwald, a markets strategist at Monument Securities. "On the other hand, the coverage was poor."

Ostwald said the low interest rate offered little attraction to typical buyers such as annuity and insurance companies, as it was too small to cover their obligations. Meanwhile, investors seeking only a safe haven were more likely to want much shorter-term issues.

"Clearly, it wasn't the best cover, but you wouldn't expect it to be," he said.

Wednesday's auction results follow a trend somewhat. On Tuesday, the Netherlands saw its borrowing rates fell to near zero per cent in a pair of short-term auctions, in a sign that investors are searching out what they consider to be Europe's safer assets at a time of concern over the level of debts in a number of countries.

Italy, the eurozone's third-largest economy, also sold large chunks of debt last week and analysts say the run of smooth auctions may be largely due to a massive €489 billion ($636 billion) infusion of cheap, 3-year credit to eurozone banks by the European Central Bank.

Some of that cheap money may be being used by some banks to buy higher-yielding short-term debt, though Italy's longer-term borrowing rate in the markets remain at dangerously elevated levels near 7 per cent.

Eurozone governments are struggling to convince financial markets that indebted governments will not default and should be able to borrow at affordable rates to repay debts as they come due. Greece, Ireland and Portugal have needed bailouts, while much larger Italy and Spain have also seen their borrowing costs rise ominously.

Italy must borrow to cover €53 billion ($69 billion) in expiring debt in the first quarter alone in a series of debt auctions beginning Jan. 13 that will provide a key test of whether the government of new Prime Minister Mario Monti, along with EU leaders and the European Central Bank, are making progress in regaining market confidence.